The Centers for Medicare & Medicaid Services (CMS) should delay implementing the “site-neutral” provisions of the 2015 Bipartisan Budget Act until it can provide fair and equitable payment to hospitals for the services they provide, the AHA told the agency in its Sept. 6 comments on the hospital outpatient prospective payment system (PPS) proposed rule for 2017.

The proposed regulations would prevent hospitals from continuing to “provide the current level of necessary, innovative and high-quality health care in their communities,” the AHA wrote CMS.

Under the controversial proposal, CMS would not directly provide payment to hospitals next year for services to patients provided at off-campus outpatient departments that started billing Medicare after the law was enacted.

And off-campus departments that were already billing Medicare as of that date would not be compensated for new service lines they add for their communities. Nor would they be reimbursed if they relocated or expanded their facility.

But hospitals would remain responsible for all operational costs, such as staff, equipment and facility maintenance, even though Medicare reimbursements would go to the treating independent provider.

In its comments on the site-neutral proposal, the AHA observed that more than half of House and Senate lawmakers this spring called on CMS to provide flexibility in carrying out the Medicare payment reductions for new off-campus hospital outpatient departments (HOPD) under the Bipartisan Budget Act to protect patients’ access to care. They told CMS that the site-neutral payment reductions under Section 603 of the law should not affect existing off-campus HOPDs that relocate, rebuild, change ownership or types of services, and should not affect services provided by a dedicated emergency department.

“Instead, CMS has proposed a short-sighted and unworkable set of policies that provide no reimbursement directly to hospitals in CY 2017 for the services they provide to Medicare beneficiaries,” the AHA stated.

Among other changes to the proposed rule, the AHA recommended that CMS allow excepted HOPDs to relocate and rebuild without triggering payment cuts; protect hospitals’ ability to offer expanded lines of service without a loss of reimbursement; and allow hospitals to transfer ownership of individual HOPDs and maintain their excepted status.

 The AHA’s comments on the proposed outpatient PPS rule followed an Aug. 26 AHA-commissioned legal analysis of the proposal by the Washington, D.C.-based law firm Hogan Lovells that found the arrangement would raise significant compliance risks under the Stark law and the Anti-kickback statute.

“If adopted, these 'site-neutral' payment rules would force some hospitals into new financial arrangements with referring physicians that present substantial compliance risk – and the very real potential for investigation or prosecution – under the federal fraud and abuse laws,” the law firm wrote

Hospital and health system leaders will come to Washington, D.C., next week to take their concerns over the site-neutral proposal to Congress. They will attend a Sept. 13 AHA-hosted Advocacy Day briefing and then meet with their lawmakers on Capitol Hill.

In a recent blog post, AHA President and CEO Rick Pollack recently summed up the hospital message: “Tell the agency to go back to the drawing board and come up with a fairer payment policy for 2017 or delay the regulations until it can.”